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Tuesday, February 7, 2012

The More Things Change, The More They Stay The Same

While we like to think that we're so highly evolved in our current Music 3.0 world, it seems hard to believe sometimes that many of the real basic issues aren't that much different than they were 50 years ago. In this excerpt from Music 3.0: A Survival Guide For Making Music In The Internet Age,Rupert Perry talks about the many similarities between the music industry of the past and the present.

One of the most beloved executives in the music business, Rupert held a variety of executive positions with EMI for 32 years. He went from vice president of A&R at Capitol to president of EMI America to managing director of EMI Australia and, later, of EMI Records U.K. to president and CEO of EMI Europe to, finally, the worldwide position of vice president of EMI Recorded Music. During his time at EMI, Rupert worked with a variety of superstar artists such as The Beatles, Blur, Duran Duran, Iron Maiden, Nigel Kennedy, Robert Palmer, Pink Floyd, Queen, Radiohead, and Cliff Richard. Such were his contributions to the British music industry that in January 1997 he was appointed CBE (Commander of the Order of the British Empire), a position of British order of chivalry that is just below knighthood. He is also coauthor of the fine book Northern Songs: The True Story of The Beatles’ Song Publishing Empire.

"You have a unique perspective of the music industry. In your eyes, how are things different today from the heyday of the record business?

One big thing was that the record labels of that time were making those things called gramophones and record players and radios, and they would also be recording content to play on these pieces, so it all fit together. But in the mid-’50s, the technology got away from the recorded-music business and got into the hands of third parties, and from that time on everything that happened technologically that effected the music business was driven from outside the business. Record labels were no longer technologists. They understood the recording process, and they understood the manufacturing and distribution process—whether it be vinyl, cassette, or CD. But that was the extent of their technology knowledge.

The other thing is how people consumed content in those days, which was that people mostly listened to the radio. Then the Japanese came up with the transistor radio, which was portable. Suddenly [the idea of] portability meant that the consumer didn’t have to sit in their living room in front of that radio. That was the start of something else from a distribution point of few. You can look at all the things that changed, but then you look at the transistor radio and think, “Gosh, the portability was so important.”

Don’t we have the same thing today with iTunes-driven digital media?

Exactly. And then the other great moment of portability came when Sony came up with the Walkman. It’s amazing that Sony let it slip through their hands and let Apple come up with the iPod, which to me is just the next stage of the Walkman. Sony’s engineers understood the portability aspect between the cassette Walkman and the CD Walkman, but thereafter they missed out on what became the iPod.

Getting back to our little history lesson, when the reel-to-reel tape recorder was introduced, that changed things forever because it had a Record button on it. It was that Record button that really started to change things.

But what really people forget is that by the end of the ’70s, the recorded-music business was in deep, deep trouble. There was a recession and a couple of years of downward trends and a lot of people thought, “This is the end of it.” There was a lot of piracy, thanks to the cassette player and that issue of the Record button, and people just weren’t buying vinyl records anymore. The issue of people making their own copies was a pretty big issue even in those days. People were copying music for free off the radio or from another cassette or a record. We reckoned that we were losing at least 25 percent of our business to home taping. So when people talk about “free” today, there’s nothing particularly new about it—it’s just a different version of the same thing.

The other big thing that happened was the compact disc. When it came along there was a big upsurge in the growth of the business, and a lot of large corporations began to take notice. When CBS, which was the king of the business at the time, sold their record business to Sony—that was huge! It was a momentous happening, because CBS decided they wanted to exit the music business, which they had been in for years.

I guess that people forget that there were a lot of big changes and issues in the music industry before the Internet.

Yes they do, but the arrival of the Internet was just as big. If we roll forward to the start of the Internet in 1993, people in the content industry didn’t get just how monumental the change was. To have any form of content available through a computer was a totally new form of distribution, but the difference was that the record label had no control over it. Up until that point, any of the media distributors (film, television, or music) were always able to control the distribution, and when you did that, you could decide where it went, who got it, and what people paid for it. With the Internet, that went out the window fast. That’s the big, big shift caused by this new form of distribution.

The other big issue that the Internet brought was that everything became global. You could be anywhere in the world and you could access Napster, so all the ways that companies tried to segment the market (the way the film industry did with its regional DVDs) were over.

Yet another issue that was a problem, is a problem, and will continue to be a problem going forward is that the laws that govern intellectual copyright are national, as opposed to global, laws. The U.S. has its own copyrights laws, as does Europe, as does Latin America, and so forth. But the nature of the business now is that it’s totally global, so it is going to require a more global approach to copyright law as opposed to the parochial approach.

What’s the future of the major labels? Do you think they’ll survive?

I think they’ll survive because they and a lot of smaller labels have catalogs of recorded music, and someone always wants to consume it. But they also have to consider what kind of business they’re in now. They’re not really into artist development anymore or signing lots of new artists like they used to in the past. What they’re really involved in is the business of rights management. They’re managing the rights in the same way that publishers are managing rights. The music-publishing industry and the recorded-music industry—two industries that grew up side by side—are now coming together a lot faster because it’s a business of rights.

If you’re an artist, you will decide if you can manage your rights yourself or, if you’ve become successful, need someone to manage them for you on a global basis. Then maybe you go to one of these entities. Either way, you’re going to have a much greater degree of flexibility in how you deal with those rights going forward.

Is a CD necessary these days?

It still may be. People tell me that they sell 50 or 100 CDs at a show. If you control your content, sell x number of CDs and x number of T-shirts and merch, and stay on the road, you can make a pretty good living. You may not be a household name, but you’ll have a really strong fan base, you’ll know who they are, and you’ll be able to communicate with them. The fan/consumer is the piece of the puzzle that you really need."

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This is the music industry blog by best selling audio and music business author Bobby Owsinski. Published every weekday, Music 3.0 looks at the new music industry and how social media plays a part in it.